BSA/AML Examination Manual - ffiec

Introduction
The Patriot Act is arguably the single most significant AML law that Congress has
enacted since the BSA itself. Among other things, the Patriot Act criminalized the
financing of terrorism and augmented the existing BSA framework by strengthening
customer identification procedures; prohibiting financial institutions from engaging in
business with foreign shell banks; requiring financial institutions to have due diligence
procedures and, in some cases, enhanced due diligence procedures for foreign
correspondent and private banking accounts; and improving information sharing between
financial institutions and the U.S. government. The Patriot Act and its implementing
regulations also:
• Expanded the AML program requirements to all financial institutions. 5 Refer to
Appendix D (“Statutory Definition of Financial Institution”) for further clarification.
• Increased the civil and criminal penalties for money laundering.
• Provided the Secretary of the Treasury with the authority to impose “special
measures” on jurisdictions, institutions, or transactions that are of “primary moneylaundering
concern.”
• Facilitated records access and required banks to respond to regulatory requests for
information within 120 hours.
• Required federal banking agencies to consider a bank’s AML record when reviewing
bank mergers, acquisitions, and other applications for business combinations.
Role of Government Agencies in the BSA
Certain government agencies play a critical role in implementing BSA regulations,
developing examination guidance, ensuring compliance with the BSA, and enforcing the
BSA. These agencies include the U.S. Treasury, FinCEN, and the federal banking
agencies (Board of Governors of the Federal Reserve System, Federal Deposit Insurance
Corporation, National Credit Union Administration, Office of the Comptroller of the
Currency, and Office of Thrift Supervision). Internationally there are various multilateral
government bodies that support the fight against money laundering and terrorist
financing. Refer to Appendix E (“International Organizations”) for additional
information.
U.S. Treasury
The BSA authorizes the Secretary of the Treasury to require financial institutions to
establish AML programs, file certain reports, and keep certain records of transactions.
Certain BSA provisions have been extended to cover not only traditional depository
5 The Patriot Act expanded the AML program requirement to all financial institutions as that term is
defined in 31 USC 5312(a)(2). However, as of the publication of this manual, only certain types of
financial institutions are subject to final rules implementing the AML program requirements of 31 USC
5318(h)(1) as established by the Patriot Act. Those financial institutions that are not currently subject to a
final AML program rule are temporarily exempted from the Patriot Act requirements to establish an AML
program, as set forth in 31 CFR 103.170.
FFIEC BSA/AML Examination Manual 4 8/24/2007